How To Easily Become A Real Estate Agent

What I’m going to talk about now is going to defy all conventional wisdom, not necessarily from a practical point but rather from the point that it has never really been talked about before.

Most real estate gurus and their training programs will have you spending countless thousands of dollars to do their creative investing. You’ll have a very basic background (at best) in real estate and be armed with a few creative techniques that never really seem to get you anywhere. Because of this you will never really hit the mark in real estate.

As I said earlier, the simplest way to assure your success as a real estate investor is to work with a real estate agent. However, I want to now take that concept to the next level. That next level is simply becoming a real estate agent yourself.

Why would you want to do this? There are two very obvious and very valuable reasons. One is to have access to the MLS so you can obtain your own data and not have to rely on someone else to get it for you. The more control you have over your investing information, the better. The other is for buying and selling your own investment properties without the high commission costs of using another real estate agent. But there are even more reasons than that, and I’m going to explain each one in great detail. I believe that 90% of the people who read this chapter will then rush out and get a real estate license.

First, it doesn’t require the commitment of money and time that most people think. I’ve polled regular people who had no idea and asked them what they thought it takes to become a licensed real estate professional. The general consensus was many thousands of dollars and years’ worth of training and schooling.

Let me give you an example of what it takes in my state, which is Utah. Most states will be very similar, though some may require a little more or a little less as far as education and cost requirements. In Utah for $395 and 90 hours, you can become a licensed professional real estate agent. The state gives you up to six months to complete your pre-licensing education. Most schools have extended evening and weekend hours. Classes are divided between video and live instruction. You cannot take any videos home nor do any of the classes online.

If you have a full-time job you can easily budget how much free time you have. From that free time you can then calculate how much time you want to spend on a weekly basis to get your pre-licensing done in an allotted time period. That gives you the flexibility to attend school in the evenings or on weekends. Pretty simple so far!

In Utah and most other states you can count on the state doing a background check on you. That means you cannot be a prior convicted felon and you have to disclose all misdemeanors. States are really strict on this. Your fingerprints are taken and you will be submitted to a criminal background check. We can’t have crooks going out and getting a real estate license and having access to all those homes. It’s no big deal if you have nothing to hide.

Let’s stop here for a moment and review how important pre-licensing education is. Most real estate boot camps the gurus have are anywhere from one to three days in length. Suppose you went to a four-day boot camp for approximately eight hours a day. That is a combined total of 32 hours of training compared to 90 hours of pre-licensing. To make matters worse, the boot camp barely touches on real estate and spends the majority of the time teaching you how to market and find motivated sellers to put deals together. Contrast this with pre-licensing where you learn about real estate, contracts and the laws that are specific to your state, things which are very important to becoming a successful investor.

You do more than just learn enough to pass a test to get a license with your real estate pre-licensing education. I always laugh when people say they didn’t learn anything but had to go through the motions to take the test and get a license, and that you really won’t use any of that stuff when you are out in the real world practicing real estate. Are you kidding me? You won’t use any of that stuff? You use it everyday!

What are the basic elements of a contract? What is the difference between statute and common law? What is the difference between tenants in common and joint tenancy? If you want to do real estate, you had better know these things. It’s kind of like saying a mechanic doesn’t have to know the difference between an alternator and a carburetor.

The pre-licensing gives you a very good basic background to help get you started. From that point the learning is a continuous process, spending time out in the field and at your brokerage office and obtaining the minimum continuing education requirements that are required in all professionally licensed fields.

Let’s pretend 12 weeks have passed and you have spent $395 for pre-licensing, taken your state exam ($68) and paid for your licensing fee ($151). Right now you should have paid just $614 to be a licensed professional real estate agent. That’s not bad, having paid such a small amount of money and spent such a limited amount of time to be a licensed professional, not to mention the increase in knowledge and understanding of the real estate field.

I challenge you to find an opportunity that requires such a minimal investment of time and money to get a professional license that offers the income potential of a real estate agent. It doesn’t exist… period! Now you have opened the door to the exciting income opportunities that await you as a licensed real estate professional.

Contrast the $614 you have spent to get a professional license to the thousands you’ll spend at a multi-day guru event. There is no question where the money is better spent. I want to be fair, though, and talk about the additional real estate costs. (The Golden Rule of real estate is to always disclose to the parties involved.)

Now you have a real estate license, so what do you do next? You have to hang your license at a brokerage office. What do I mean by that? You have to be under the supervision of a principal broker. Let’s say that a particular real estate office has 50 active licensees in it. There has to be a principal broker who is in charge of the conduct of all the licensees as per state requirement. This means the broker also owns the listings that the agents bring into an office.

There can be other brokers in the same office; however, they will be designated as associate brokers as there can only be one principal broker in an office. The principal broker’s name will be on file with the state’s real estate division. To be a principal or associate broker requires additional education and experience levels that are documented through the amount of transactions you do over time.

Now let’s get back to you having your brand new license and needing a place to hang it. You can now interview with many real estate companies in your town and see where you would like to hang your license and go to work. Here’s where a lot of people have some misconceptions. They think the process is like a job interview and very rigorous, but nothing could be further from the truth. Since a real estate agent is not a salaried position, most brokers have no problem accepting new agents into their office.

They do this because they know most new agents are good for four to five real estate deals as soon as they get their license. These deals could come from friends, family, spheres of influence and many other places. A real estate brokerage makes its money when a licensee lists (sells) a property or finds one for a buyer. There is a commission paid on a buy or sell, and the licensee splits this commission with the brokerage. (How much your split is depends upon your experience and your total volume, or production. Obviously, when you are newer your splits are going to be a little less for you.) Since a real estate agent is paid on commission, it really doesn’t cost a broker to take in new licensees. The light bill has to be paid whether you are there are not.

Now, what about some of those additional costs I mentioned earlier? Some brokerages will charge you a monthly fixed cost to be at a brokerage. This is also known as a desk fee. This can be good if you are churning out a high amount of volume and will save you money in the long run. However, if you are just getting started you will want to avoid this. Most brokerages do not charge desk fees unless they want to hire seasoned agents only.

Almost all brokerages belong to an MLS and a Local Board of Realtors ® Members who belong to an MLS are usually split by area. I live in Washington County, Utah, and the name of my board is the Washington County Board of Realtors®.

As with any board, the Board of Realtors® has staff and there will be dues involved. It is powerful to belong to a board and almost everyone does. The exceptions are usually small mom-and-pop shops. Annual dues for a board can range from $350 to $800 and usually include your national dues as well. National dues go to the National Association of Realtors® (NAR).

Incidentally, NAR is the “Voice for Real Estate” and is America’s largest trade association, representing over 1 million members. The fees are very reasonable compared to fees in other organizations. One deal and you are in the black. Who can’t do one real estate deal in an entire year? That would be a piece of cake for almost anyone.

Let’s recap. You now have a brokerage where your license is hung, and you have spent about $1400 for your education, license and a membership to a local board for a year. That’s not bad at all when you think about it. That same $1400 dollars may buy you a couple of days at a boot camp with a guru if you’re lucky.

Here’s the power of being at a brokerage. All real estate offices receive calls on a daily basis inquiring on properties the brokerage has listed or just general inquiry calls. Since established agents are usually out in the field working, the office needs someone to answer these calls. This is usually split up on a roster. New and seasoned agents can take assigned time slots known as floor time. That simply means when a general inquiry call comes in, it is assigned to the agent who is on floor at that time.

I know of a lady here in my town who received her license. In her first month she grossed over $20,000 in real estate commissions. How did she do that? She was on floor time her second week into the business and received a call. She then showed a couple of homes about which the callers inquired and wrote a purchase contract on a $500,000 home. That $500,000 home paid a 3% commission when the deal closed. It’s not hard to do the math and figure out that was a $15,000 commission to her.

Two weeks later, the same thing happened again, this time on a $200,000 home. Same scenario – she got an accepted offer, had a relatively fast closing and grossed $6000 on this sale ($200,000 x 3%). She grossed over $21,000 her first month in the real estate business! Of course, you need to realize she had to pay a split with her brokerage, meaning her split could have been anything from 10% to 30% of the commission going to the brokerage. Are these results typical? Absolutely! They can happen to just about anyone at any given time.

She spent $1400 dollars to have a professional license and grossed over $21,000 her first month in real estate. How powerful is that? Do you think she is hooked on real estate and thinks it’s the greatest? You’d better believe it. And it just keeps getting better.

In 2004 the National Association of Realtors® (NAR) reported a total of $75.3 billion was paid out in real estate commissions to licensees and brokers on single-family homes. That’s amazing! Do you want to know something even more amazing than that? This number excluded new construction, commercial, multi-family and land. So if you want to know where the money is, I just proved it to you.

The average income for a real estate agent is $50,000 a year. As a matter of fact, there are a lot of real estate agents who make millions of dollars a year in commissions. Some are doing it in high-end markets, but some are also doing it in very ordinary markets. I challenge you to find anyone making anything remotely close to that with a guru's nothing-down program.

I can guarantee that not a whole lot of people made a killing in nothing down guru programs and by working foreclosures. Sure, there were some, but not many. As big as the United States is, there will always be a few people who find some deals and get some big paychecks, and of course, those are the ones that you mainly hear about.

Most of these people had drive and would have been successful in just about anything anyway. We’ve all known people like that. That’s the beauty of being a real estate agent/investor. It’s designed for the average person to make money in real estate.

I’ve heard of people who have spent a year or more trying to put a deal together and without it ever happening. Can you imagine spending a year and getting nothing? How many properties could you sell to buyers and sellers in that same amount of time if you had a real estate license? Then you could take that money and parlay into properties for yourself!

Let’s talk about some more benefits of being a real estate agent. I can almost hear you thinking, “But I have a job.” That’s the beauty of it. Being a real estate agent part time isn’t like you have to be there from nine to five every day. Since you are classified as an independent contractor, there are no minimum time requirements. That means if you want to work a few evenings or only on weekends, you can now do it as a part-time real estate agent. How is that for flexibility?

Let’s say you only want to work with motivated buyers. A motivated buyer is someone who needs to find a house to buy right now and close in the shortest amount of time possible. Would you agree there are buyers coming into your town on a daily basis ready to buy a home right now? Of course you would! To capture those buyers, run an ad that says, “Free List of the Best Buys in the Area Before They’re Advertised,” or, “Free List of Homes Under Market Value.” What legitimate buyer can say no to those offers? They can’t. That is how you get a flood of “now” buyers to work with and start putting commission checks into your bank account right away.

Even if you don't want to work with buyers, you can simply run the ads and broker out the leads to someone in your office for a referral fee. That could sure be a nice little side income.

There are some brokerages that don’t want a lot of part-time agents; however, most are happy to have them. Just imagine, you could grow your real estate and investing business then eventually transition into real estate full time, and quit your job if you wanted. In addition, when you work under a broker you are considered an independent contractor. Check with your tax professional for the advantages this can be for you.

Earlier I said that most new agents are good for four to five deals right out of the gate. What do I mean by that? Most brokerages know that a new agent will be excited having a fresh new license in their possession. They also know that you’ll be talking to a lot of friends, family, and co-workers both past and present. When you do this you will naturally drum up some real estate business, working with either buyers or sellers.

Many times friends or family will wait until you get a license and then simply allow you to represent them in a transaction to help get you going in the business. It’s kind of like the family member that got into the insurance business. The first thing they teach you is to call everyone you know in your sphere of influence and get them to change their insurance to your company since you are now in the business.

Here’s another twist almost everyone overlooks. Getting a real estate license just so you can buy and sell the house you live in is such an advantage. With the average homeowner moving every three to five years and paying $8,700 to $15,000 or more in commissions to sell their home, it’s no wonder you would want to have a real estate license just for that reason alone. Imagine all those commissions now getting paid to you.

Let’s take a look at an example so you can better understand what it would cost you without having a real estate license. If you had a $168,000 house you were selling, you’d owe a 6% commission at closing of $10,080. Doing this same scenario four times in your life would be a grand total of $40,320 in commissions you paid to a real estate brokerage.

That same $40,320 at 6% interest for 12 years would be a whopping $81,131.76! Yes, you read that right. Keep in mind this is being conservative as far as the price of the home and the number of times sold. If your home is more expensive than $168,000 and you move more than four times during your lifetime, it will be much more. You would easily be into six figures (as in over $100,000) after interest, which could have been put in your pocket and not someone else’s.

This is money that could help put your kids through college, pay for braces or family vacations, help fund retirement or whatever. If you are a licensed real estate agent, though, you can cut that figure in half. Why? You will be saving 3% in commissions paid since you would be representing yourself in the sale or purchase of your own home. Plus you have the added knowledge of the market, so you are making informed decisions before you sell or buy for yourself.

Another benefit is that you would get paid 3% of the sales price when you buy a new one. That means if you sold your home and moved across town and bought a $200,000 home, you would be paid $6000 for representing yourself in the purchase. That’s pretty nice isn’t it?

Here’s a perfect example of what happens in real estate to agents on a daily basis. In October 2003 I was given a lead from a breakfast club meeting I have every Friday with local business owners here in my area. To make a long story short, I followed up on a lead that was given to me one Friday morning. That lead eventually turned into a $51,000 commission check into my pocket. It really wasn’t a lot of work either.

Just think of how many times, even this year, you have known someone in your sphere of influence that has bought and sold a home? This is business that could have been yours, had you had a license, even while working your full-time job.

Let me give you a very real scenario. While keeping your job and selling real estate in your spare time, do you think you could find two people that would sell their house with you and two people that would buy a house from you in one year? Of course you could! If we used an average sales price of $200,000 per property times four units bought or sold, that would give you a total of $800,000 in total sales. Based on an average real estate commission of 3% ($800,000 x 3%), that's $24,000 to you.

Would a $24,000 boost in income help you this year? Maybe you’d pay for a set of braces for your kids or put a down payment on a new car. What about taking a surprise trip to Disneyland this year with your family? Can you imagine how this can change your income… your future?

So now you have three ways to get paid: buyers, sellers and investing using real estate commissions to buy your own properties. How great is that?

I’m not saying you have to quit your job and do this full time. I’m not saying that you have to list homes and work with buyers. I’m simply saying if you want to, you can. If you only want to use a real estate license as a tool to gain more of an in-depth knowledge of how it works and use it for your own gain, then you can do that too. As I pointed out earlier, if you do nothing but use it to buy and sell your own properties you are way ahead of the game. Even if you don’t get a license then think how valuable the training is alone and the low cost of the education. You now have greater control and an edge to get you up the ladder of success.

Here’s another powerful point. In all of those guru programs you never really get any direction or a solid foundation of real estate skills. Because of this lack almost everyone fails. In contrast, a lot of people who have a real estate license are successful because of the support system that’s already in place at a brokerage.

A lot of gurus will tell you that networking is a very good way to find properties. Imagine networking as a real estate agent with other agents. Do you think that may help you find additional deals? You’d better believe it will! You’re rubbing shoulders with others who are right in the thick of if all. You’ll start to develop relationships with agents at other offices. You’ll also begin to develop relationships in other industries related to real estate, industries like mortgages, titles, inspectors and a whole lot more. Sure, you could do this on your own, but why not speed the process up and make more money by having a real estate license?

Experience is another big factor. In my office we have 70 licensed real estate professionals. That translates into approximately 400 years’ worth of real estate experience. I once was involved in a deal that had a dispute over water rights. Lo and behold, there is a gentleman in my office with over 25 years of experience in water rights. Real estate encompasses many areas. You have residential, commercial, land, water rights and much more.

Being in a real estate office is like being a doctor at a hospital. If I’m a neurosurgeon and I have a question pertaining to another specialty, like heart surgery, I simply ask one of my colleagues. It’s the same way in real estate. I don’t deal a lot with water rights, but when I have a question there are several people in my office that specialize in it. You have no idea what a valuable resource this is. No amount of guru coaching or training can even begin to come close to this.

Here’s another huge advantage. Let’s say you don’t want to do traditional real estate sales. You’d be surprised how many deals can just fall in to your lap once your sphere of influence knows you have a license. Additionally, when you are plugged into the system, you’ll know about new listings that come into the office before they hit the MLS.

Think about this, too, for just a moment. If you have property listings for sale, you actually have a vested ownership in that property. How? Through the listing agreement! The listing agreement simply says that if you sell the property you are entitled to a commission. So if I had ten listings at $200,00 apiece, that means I have $2 million in inventory. That could be a potential commission of $30,000 to $60,000! Think about what a car dealer has to pay to "floor" $2 million of inventory. That’s powerful!

Being a real estate agent actually gives you additional protection. Almost all creative guru-type programs will try to sell you some sort of generic, one-size-fits-all real estate contracts and forms. As I discussed earlier, this is next to impossible. I’ve been to countless seminars where the gurus have said they have spent thousands and thousands of dollars with their attorneys to have contracts written and slanted in their favor, meaning pro-buyer if you are a buyer and pro-seller if you are a seller. If you have ever read a contract slanted in the other party’s favor, it’s obvious and insulting to you.

Contrast that to having a real estate license and access to state-approved forms. Everyone should be using the forms that are approved by the division of real estate in their particular state. Why? They protect both buyer and seller and that’s how it should be. States have done hundreds of thousands, if not millions, of real estate transactions over the years, and they know what goes wrong in contracts. State contracts have the language set to protect buyer and seller and lay out specific remedies should thing go awry or if there is a dispute. This is very important!

Most gurus don’t know that you can pick up those contracts from most states’ divisions of real estate or print these forms online. They are far superior to using a guru form or going down to the office supply store and purchasing a basic, one-page purchase contract.

A lot of investors that use generic purchase contracts don’t understand how worthless some of them are. A lot of those contracts don’t go into enough details or lay out specific remedies if there is a problem. You’re left with ambiguity and interpretation, which can cost you dearly in court later. There is a reason all states have spent a lot of time and effort putting their contracts together. They work!

I don’t know why so many investors overlook the advantage of having a real estate license. I believe it’s how a lot of them are taught. The gurus say things like, “You don’t need a license,” and “It’s just going to make it more difficult.” Why? Because you have to disclose! So what? All that means is when I present an offer on a state-approved form, that I have to be sure to mention that I am a licensed real estate agent. That isn’t going to stop anyone from wanting to sell me their house. Another reason they give is, “You are more regulated.” You’re right, agents are more regulated!

However, that’s a good thing. It’s going to keep you out of a lot of trouble. You’ll have a better understanding of what you’re doing instead of going out half-cocked from reading a book and listening to a few CDs. The reason most gurus never push the issue of getting a license is because, if you do, you won't need them anymore, and they know that!

You will find real estate to be a very rewarding experience, whether you get into it just for yourself or to help other people. It gives you a certain satisfaction to know that people rely upon real estate professionals to help them move their families and businesses. The full-service brokerage business has been around for about 100 years or more. Let’s face it, nothing is going to last that long if it doesn’t have any value!

I challenge you to go out and get your real estate license and see the difference it can make in your real estate investing and, more importantly, your future.